U.S. Supreme Court

Hanover National Bank v. Moyses, 186 U.S. 181 (1902)

The Bankruptcy Law of 1898 is not unconstitutional because it provides that others than traders may be adjudged bankrupts, and that this may be done on voluntary petition.

Nor is it unconstitutional for want of uniformity because of its recognition of exemptions by the local law.

The notices provided for by the act are sufficient under the Constitution of the United States, and the discharge of the debtor under proceedings at his domicil authorized by Congress is valid throughout the United States.

This was an action brought by the Hanover National Bank of New York against Max Moyses in the Circuit Court of the

United States for the Eastern District of Tennessee, November 20, 1899, on a judgment recovered against him in the Circuit Court of Washington County, Mississippi, December 12, 1892.

The amended declaration averred the execution of a certain promissory note by defendant payable to the Bank of Greenville, Mississippi; the indorsement thereof to plaintiff in New York; default in payment, suit in the state court of Mississippi having jurisdiction in personam against defendant, who was then a citizen and resident thereof; recovery of judgment, and that the judgment

"still remains in full force and effect, unappealed from, unreversed, or otherwise vacated, and the plaintiff hath not obtained any execution or satisfaction thereof."

It was also averred that, after the rendition of the judgment in Mississippi, defendant changed his domicil and residence to the State of Tennessee, and thereafter,

"not being a merchant or a trader, nor engaged in business or in any commercial pursuits, nor using the trade of merchandise, and being without mercantile business of any kind, filed his voluntary petition in bankruptcy in the District Court of the United States for the Southern Division of said Eastern District of Tennessee, under the Act of Congress of the United States of America approved July 1, 1898, entitled 'An Act to Establish a Uniform System of Bankruptcy Throughout the United States,' and was adjudged bankrupt, and, 'since August 1, 1898,' 'granted an adjudication of his discharge in bankruptcy from all his debts, including that herein sued for.'"

It was admitted that the discharge was "good and effectual if said act of Congress and the proceedings thereunder are valid," but charged that the act was void because in violation of the federal Constitution in many particulars set forth.

Plaintiff also stated that it was and had continued to be domiciled in and resident in New York; that it was not a party to said proceedings in bankruptcy, nor did it enter its appearance therein for any purpose, nor did it prove its claim, nor did it in any way subject itself to the jurisdiction of the district court in said proceedings; that plaintiff was not served with process

of any kind on said petition for adjudication, and had no notice, personal or otherwise, of the said proceedings by voluntary petition for adjudication; nor was any notice of the proceeding to adjudicate defendant a bankrupt given plaintiff, or anyone else,

"nor is any notice of any kind of such proceeding to adjudicate a person a bankrupt upon his voluntary petition required by said act of Congress, and in this said act of Congress violates the Fifth Amendment,"

as does the "adjudication of defendant as a bankrupt;" that the situs of the promissory note, on which the judgment was rendered was never within the jurisdiction of the district court, and that the court never acquired jurisdiction of plaintiff, nor of the debt sued on.

Demurrer was filed to the amended declaration, the demurrer sustained, and final judgment entered dismissing the suit. The circuit court stated that it took this action on the authority of Leidigh Carriage Company v. Stengel, 95 F. 637. Thereupon the bank brought this writ of error.

Errors were specified as follows: that the discharge under the Act of Congress of July 1, 1898, was a nullity, because:

"1. Said act violates the Fifth Amendment to the Constitution of the United States in this:"

"(a) It does not provide for notice as required by due process of law to the creditor in voluntary proceedings for adjudication of bankruptcy and for the discharge of the debt of the creditor."

"(b) Ten days' notice by mail to creditors to oppose discharge is so unreasonably short as to be a denial of notice."

"(c) The grounds of opposition to a discharge are so unreasonably limited as, substantially, to deny the right of opposition to a discharge. Thereby the act is also practically a legislative promulgation of a discharge contrary to Article III, Section 1, of the federal Constitution."

"(c) It provides that others than traders may be adjudged bankrupts, and that this may be done on voluntary petitions."

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